Book4

3M.pdf

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2013

Joe Tidd, John Bessant, Keith Pavitt

3M: Rethinking Innovation

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3M1: Rethinking Innovation

Background

Large (70K employees, $15bn sales), global operations (200 countries), multi-product (50K range), multi-market business.

Innovation ‘Claim to Fame’

This company has been around for just over 100 years and during that period has established a clear reputation as a major innovator. Their technical competence has been built up by a long-term commitment to R&D on which they currently spend around $1bn p.a.; this has yielded them a regular position in the top 10 in US patents granted. They have launched a number of breakthrough products which have established completely new markets and they have set themselves a consistent stretch target of getting 30% of sales turnover from products launched during the past four years.

How Do They Manage Innovation?

The company presents a consistent picture in interviews and in publications – innovation success is a consequence of creating the culture in which it can take place – it becomes ‘the way we do things around here’ in a very real sense. This philosophy is borne out in many anecdotes and case histories – the key to their success has been to create the conditions in which innovation can arise from any one of a number of directions, including lucky accidents, and there is a deliberate attempt to avoid putting too much structure in place since this would constrain innovation.

Innovation Strategy and Leadership

The company has always valued innovation and this has been a consistent and key theme since their inception; their ‘hero’ figures amongst previous CEOs have been strongly associated with enacting and supporting the innovation culture which characterizes the firm. Their overall innovation strategy is focused on two core themes – deep technological competence and strong product development capabilities. They combine these to enable them to offer a steady stream of breakthrough products and line extensions/product improvements. A great strength is the integrated input from the technical and marketing side which enables ‘creative association’, coming up with new and often powerful combinations of needs and means.

A number of key strategic enablers are worth flagging:

• Setting stretch targets – such as ‘x% of sales from products introduced during the past y years’ – provides a clear and consistent message and a focus for the whole organization

1 For more on this company and the ways in which it manages innovation see Gundling, E. (2000). The 3M way to innovation: Balancing people and profit. New York, Kodansha International

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• Allocating resources as ‘slack’ – space and time in which staff can explore and play with ideas, build on chance events or combinations, etc.

__________ • Encouragement of ‘bootlegging’ employees working on innovation projects in their own time

and often accessing resources in a non-formal way – the ‘benevolent blind eye’ effect. • Provision of staged resource support for innovators who want to take an idea forward

– effectively different levels of internal venture capital for which people can bid (against increasingly high hurdles) – this encourages ‘intrapreneurship’ (internal entrepreneurial behaviour) rather than people feeling they have to leave the firm to take their good ideas forward.

In recent years they have seen their momentum falter, in part because of the sheer scale of the operation and the range of competition. Their response has been to identify a series of ‘Pacing Plus’ programmes, which attempt to focus and prioritize around 30 key areas for development across the business – essentially an innovation strategy.

Enabling the Process

Having been working on innovation for so long, they have developed a set of structures and policies to guide innovative activity from picking up signals through to implementation. Importantly they allow for parallel routes through their system so that innovations can come from close market interactions or from deep technology research in their labs or from various forms of collaboration, or from serendipitous discovery by their staff. As they put it, ‘we don’t have a skunk-works – round here everyone is a skunk!’ Their skill in enabling association is particularly relevant; many of their breakthrough products have come about because staff with technical knowledge have worked alongside those with awareness of real or latent market needs and the result has been a creative combination.

There is a formal stage-gate system for innovations and extensions based on established products but in addition there is a clear progress route for more radical ideas, moving from an incubator stage, where they are encouraged and where development funds are available against loose targets, through to much more rigorous business plan appraisal for projects further down the line. The ‘trial by fire’ approach is well-known but carries with it a strong element of encouraging innovation champions to take non-linear ideas through the system. Effectively they run parallel systems which all involve funnels and clear gateways through which ideas pass into narrower parts of the funnel and which also commit more extensive resources – but although the mechanisms differ, the intent is the same.

Building an Innovative Organization

• Recognition and reward. Throughout the company there are various schemes which acknowledge innovative activity – for example, their Innovator’s Award which recognizes effort rather than achievement

• Reinforcement of core values. Innovation is respected – for example, there is a ‘hall of fame’ whose members are elected on the basis of their innovative achievements.

• Sustaining ‘circulation’. Movement and combination of people from different perspectives to allow for creative combinations – a key issue in such a large and dispersed organization.

• Allocating ‘slack’ and permission to play.

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Allowing employees to spend a proportion of their time in curiosity-driven activities which may lead nowhere but which have sometimes given them breakthrough products.

• Patience. Acceptance of the need for ‘stumbling in motion’ as innovative ideas evolve and take shape. Breakthroughs like Post-it’s and ‘Scotchgard’ were not overnight successes but took 2-3 years to ‘cook’ before they emerged as viable prospects to put into the formal system.

• Acceptance of mistakes and encouragement of risk-taking. A famous quote from a former CEO is often cited in this connection: ‘Mistakes will be made, but if a person is essentially right, the mistakes he or she makes are not as serious, in the long run, as the mistakes management will make if it’s dictatorial and undertakes to tell those under its authority exactly how they must do their job … Management that is destructively critical when mistakes are made kills initiative, and it is essential that we have many people with initiative if we are to continue to grow.’

• Encouraging ‘bootlegging’. Giving employees a sense of empowerment and turning a blind eye to creative ways that staff come up with to get around the system acts as a counter to rigid bureaucratic procedures.

• Policy of hiring innovators. Recruitment approach is looking for people with innovator tendencies and characteristics.

Linkages and Networking

• Recognition of the power of association – deliberate attempts not to separate out different functions but to bring them together in teams and other groupings

• Encouraging broad perspectives. For example, in developing their overhead projector business, it was close links with users made by getting technical development staff to make sales calls that made the product so user-friendly and therefore successful.

• Strong culture dating back to 1951 of encouraging informal meetings and workshops in a series of groups, committees, etc., under the structural heading of the Technology Forum – established ‘to encourage free and active interchange of information and cross-fertilization of ideas’. This is a voluntary activity, although the company commit support resources, but it enables a company- wide ‘college’ with fluid interchange of perspectives and ideas.

• Recruiting volunteers. Particularly in trying to open up new fields, the involvement of customers and other outsiders as part of a development team is encouraged since it mixes perspectives.

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Useful links

Company website with extensive detail on their history

https://www.3m.com/

Timeline

https://www.3m.com/3M/en_US/company-us/about-3m/history/timeline/

History

https://www.3m.com/3M/en_US/company-us/about-3m/history/

book4m.pdf

MBA 580 Organization Overview

(Processes, Structure, Culture)

Your company manufactures and distributes automobiles across six continents. The structure is very

complex and it is difficult to accurately count the levels of hierarchy. The company operates under a tall

matrixed structure design.

Tall structures can be cumbersome, and decision makers are often those farthest from the customer.

Communication can be slow and difficult, also slowing down decisionmaking speed. The specialized

functions and organizations, often referred to as centers of excellence or centers of expertise (COE),

allow for deep knowledge and expertise. Your company has many functional COEs where increased

structure, governance, and control allow for resource and process efficiencies. Resources are

centralized, reducing duplication of effort across the organization. These efficiencies can, however,

result in rigid, inflexible processes. In addition, COEs can create functional silos or reduced cross

functional coordination and lack of connectedness, where each function is striving toward its own

unique objectives.

Your company follows a centralized and standardized approach where enterprisewide decisions are

often made centrally and at the top of the hierarchy. This centralization makes it easier to implement

common policies and practices, prevents parts of the organization from becoming too independent, and

capitalizes on specialization.

Matrixed organizations are often associated with this specialized COE structure. Rather than having

permanent crossfunctional teams or organizations working on specific projects or product launches,

matrixed organizations pull teams together from the various functional departments. Specialists are

pulled from functional areas to work on a specific project or product design. In essence, they report to

two managers at the same time and may work on multiple projects simultaneously. Although the project

manager, who is on the same leadership level as the functional vice president (VP), supervises the

project, the true management authority still resides with the VP.

Specialists supporting specific product launches generally remain “seated” with their functional team

but meet regularly with their product team to advance the project. They may be fully dedicated to the

project or still work on other unrelated projects.

Finally, product teams are pulled together at the enterprise level and are not regionspecific. Although

they may produce differentiated projects for unique regions, their primary focus is on enterprisewide

initiatives.

Organization Structure Chart

Product A Product B Product C

Functional VPs: Project Manager Project Manager Project Manager

Design

Technology

Hardware

Electronic Systems

Safety

Engineering

Sustainability

Quality

Strategy

Finance

Procurement

Marketing

Specialists are pulled from functional area

to work on specific project or product

design. In essence, they report to two

managers at the same time and may work

on multiple projects simultaneously.

book4.docx

Overview

In Milestone One, you recommended an innovation approach (incremental or discontinuous) to integrate IoT into your organization’s product line. Now that senior management has approved your recommendation, your task as a middle manager for one of the top U.S. producers of luxury and mass-market automobiles and trucks is to ensure your recommended innovation approach is implemented effectively and efficiently. In this assignment, you will read a case study and write a report that compares your organization’s innovation processes with 3M’s processes. This report will help your cross-functional team identify your company’s process gaps when implementing IoT in the product line and will help to eliminate potential process inefficiencies.

Directions

Use the information included above in the overview and the 3M: Rethinking Innovation case study and Organization Overview included in the Supporting Materials section to compare your organization with 3M to identify process gaps within your organization.

Specifically, you must address the following rubric criteria:

1. Analyze 3M’s experience for a process-based approach toward innovation.

A. In what ways does 3M manage innovation?

B. What is the innovation strategy and leadership style within 3M?

C. How does 3M enable the innovation process?

2. Identify significant features or processes that promote innovation from the case study.

A. How does the management team within 3M recognize and reward innovative employees?

B. What is the concept and importance of “permission to play” within 3M?

C. How do the 3M attributes of patience and acceptance of mistakes enhance an innovative culture?

3. Compare your company with 3M. You will need to reference the Organization Overview document in the Supporting Materials section when comparing the two companies.

A. What are the key differences between the organizational structures of your company and 3M?

B. How are formal and informal innovation management different?

C. How does the organizational structure in each company affect communication? Why is this important to innovation?

4. Identify the process gaps of your organization. When identifying process gaps, reference the Organization Overview document in the Supporting Materials section.

A. What changes should be made to make the organizational structure support innovation?

B. What rewards could your organization adopt to motivate and encourage innovative behavior?

C. How should your company examine its timeline to identify ways of improving the success of long-term projects?

What to Submit

Submit a 2- to 3-page Word document using 12-point Times New Roman font, double spacing, and one-inch margins. References should be cited according to APA style.

Supporting Materials The following resources support your work on the assignment:

See attached

Overview

In Milestone One, you recommended an innovation approach (incremental or discontinuous) to your organization for implementing IoT into its product line. Now that senior management of your company has approved your recommendation, your task as a middle manager for one of the top U.S. producers of luxury and mass-market automobiles and trucks is to find an efficient process for your cross-functional team to follow during the development of your IoT innovation.

You and your team are considering using Cooper’s stage-gate process for new product development. This is a standard process that shows the journey of an idea from conceptualization to the market. You decide to create a detailed flowchart on one possible process for implementing the innovation approach recommendation you made to share with your cross-functional team.

Directions

Create a PowerPoint presentation with the following requirements, including a detailed flowchart. You may utilize PowerPoint’s online templates or SmartArt features, which will provide you with a variety of chart options to choose from. Ensure the presentation is useful in helping your team understand the stage-gate process.

Specifically, your presentation must address the following rubric criteria:

1. Describe the major elements of the stage-gate process (1–2 slides).

A. How many stages are in the process?

B. What is the purpose of each stage?

2. Create a stage-gate process flowchart (1 slide) using proper shapes for each step in your flowchart.

A. In the flowchart or speaker notes, list an example of an activity at each stage.

B. In the flowchart or speaker notes, list a decision criterion at each stage using your company. Some examples of decision criteria include:

i. Filter ideas to the preliminary investigation

ii. Filter projects to business opportunities

iii. Filter projects to product or process development

iv. Filter products to limited launch

v. Filter products to international marketing

3. Discuss the implications of using the stage-gate process (1–2 slides).

A. When is the use of the stage-gate process most beneficial?

B. How could the stage-gate process slow down innovation?

C. Is the stage-gate process more conducive to an incremental or discontinuous innovation? Explain your reasoning.

What to Submit

Using PowerPoint, create a presentation that is 3 to 5 slides with detailed speaker notes that highlight the important points you want to emphasize to your team. References should be cited in APA format.

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Overview

In your role as controller of a division of TransGlobal Airlines, you are responsible for assessing the possible acquisition of the two identified small airlines in the Caribbean specializing in chartered flights for luxury vacations using light aircraft (60 passengers or less).

One of the important steps in this acquisition process is analyzing, understanding, and identifying all the external and internal elements that can affect the organization’s performance, and, as businesses are greatly influenced by their environment, all the situational factors that determine how day-to-day circumstances impact firms. You can assess situational factors by performing a business environment analysis. The analysis entails assessing the level of threat or opportunity these situational factors might present. These evaluations are later translated into the decision-making process. The analysis helps align strategies with the firm’s environment. You will use the PESTEL method to perform this analysis.

Prompt

Use the information provided to you in the TransGlobal Airlines Information document to perform a business environment analysis using the PESTEL method. Your task is to analyze the internal and external business environment of TransGlobal Airlines by identifying the impact of each PESTEL factor on the business environment.

Specifically, you must address the following rubric criteria:

1. Identify one political factor that can affect the company’s business environment and explain any potential impact on acquisition strategy.

2. Identify one economic factor that can affect the company’s business environment and explain any potential impact on acquisition strategy.

3. Identify one sociological factor that can affect the company’s business environment and explain any potential impact on acquisition strategy.

4. Identify one technological factor that can affect the company’s business environment and explain any potential impact on acquisition strategy.

5. Identify one environmental factor that can affect the company’s business environment and explain any potential impact on acquisition strategy.

6. Identify one legal factor that can affect the company’s business environment and explain any potential impact on acquisition strategy.

What to Submit

Submit a 1- to 2-page Word document using double spacing, 12-point Times New Roman font, and one-inch margins.